Mining giant Rio Tinto and Giampaolo Group have finalised the deal to establish the Matalco joint venture (JV) to produce low-carbon recycled aluminium products.

Rio Tinto acquired a 50% interest in the Matalco business from Giampaolo Group, by paying $700m and after securing all regulatory approvals.

The JV, which was agreed by the parties in July 2023, will integrate the capabilities of the largest primary and secondary aluminium producers in North America to fulfil the demand for low-carbon materials.

With this stake, Rio Tinto can now offer a complete range of aluminium products. These include primary aluminium produced with hydropower, along with a diverse portfolio of recycled aluminium.

It also expands the miner’s US aluminium operations, where the demand for recycled aluminium is projected to grow by more than 70% between 2022 and 2032. The demand will mainly come from the transportation, construction, and packaging industries.

During this period, global consumption of recycled aluminium is also expected to increase by over 60%.

Matalco will continue operating the JV’s facilities in the US and Canada. These facilities have a recycled aluminium production capacity of 900,000 tonnes (t) per annum.

It will also continue providing closed-loop solutions for its clients, turning scrap into aluminium billets and slabs.

Matalco produced about 400,000t of recycled aluminium, which included 78% billet and 22% slab, in the eight months ended 30 September 2023.

Its earnings before interest, tax, depreciation and amortisation (EBITDA) during the same period was $165 per tonne.

Rio Tinto CEO Jakob Stausholm said: “Creating the Matalco joint venture gives Rio Tinto a leading position in the rapidly growing North American recycled aluminium market, allowing us to offer a full complement of low-carbon recycled products.

“We look forward to working in partnership with Giampaolo Group to support the drive to net zero by expanding recycled production and providing closed-loop recycling solutions to help our customers reduce their carbon footprint.”

Giampaolo Group CEO Chris Galifi said: “We are thrilled about beginning our partnership with Rio Tinto, on forming a joint venture for Matalco. This collaboration showcases our dedication to continuously evolving our production of high-quality, low-carbon aluminium.

“We look forward to continuing to grow with our new partners while providing products that support sustainability.”